OPERATIONS RESEARCH

UNIT-I: INTRODUCTION TO

OPERATIONS RESEARCH

INTRODUCTION:
In todays complex business environment most management decisions cannot be made by simply applying personal experience, guess work or intuition, because the consequences of wrong decisions are serious and costly. Operations research as one of the quantitative aid to decision making offers the decision maker a method of evaluating every possible alternative(act or course of action) by using various techniques to know the potential outcomes. This is not to say how ever that management decision making. In general, while solving a real life problem the decision maker must examine it both from quantitative as well as qualitative nature.

 Information about the problem from both these cases needs to be brought and assessed in the context of the problem. Based on some mix of the two sources of information a decision should be taken by decision maker.

DECISION MAKING PROCESS:

QUALITATIVE PROBLEM

REAL LIFE PROBLEM QUANTITATIVE PROBLEM

ANALYSIS

FINAL DECISION

HISTORY OF OR:
The term operations research was coined by MC CLOSKY and TREFTHEN in 1940 in the U.K. It is generally agreed that operations research came into existence as a discipline during World War II, when there was a critical need to manage scarce resources. The term Operations Research was coined a result of research on Military Operations during this war. Since the war involved strategic and tactical problems which were greatly complicated, to expect adequate solutions from individuals or specialists in a single discipline was unrealistic.

 Therefore, groups of individuals who collectively were considered specialists in Mathematics, Economics, Statistics and Probability theory, Engineering, Behavioral and Physical Science were formed as special units within the armed forces to deal strategic and tactical problems of various military operations.

After the war ended scientists who had been active in the
military or groups made efforts to apply the operations research approach to civilian problems, related to business, industry, research and development etc.,

DEFINITION:
Operations research is the systematic application of quantitative methods, techniques and tools to the analysis of problem involving the operation of systems.

SCIENTIFIC METHODOLOGY OR PHASES OF O.R:

The Operations Research consists of the following three phases: 1. Judgment Phase

2. Research Phase 3. Action Phase

OPERATIONS RESEARCH AND DECISION MAKING:

OR uses the method of science to understand and explain the phenomena of operating systems. OR may suggest alternative courses of action when a problem is analyzed and a solution is attempted.

 OR may be regarded a tool that enables the decision maker to be objective in creating alternatives and choosing an alternative which is best among these.

Decision making is not only the head-ache of management

rather all of us to make decisions. We decide daily about many minor and major issues. The essential characteristics of

all decisions are:

1.Objective

2.Alternatives at the disposal and

3.Influencing factors.

Applications and Scope of OR:

1. Finance and Accounting:
Dividend policies, investment and portfolio management, auditing, balance sheet and cash flow analysis. Break-even analysis, capital-budgeting, Cost allocation and control and financial planning.

2. Marketing:
Selection of production mix, marketing and export planning. Best time to launch a new product Sales effort allocation and assignment Predicting customer loyalty. Advertising media planning, selection and effective packing alternatives.

3. Purchase, Procurement and Exploration:

Optimal buying and reordering under price quantity discount Bidding policies Transportation planning Vendor analysis

Replacement policies

4. Production Management: 5. Facilities Planning:

Location and size of warehouse or new plant, distribution centers and retail outlets Logistics, layout and engineering design Transportation, planning and scheduling

6. Manufacturing:
Aggregate production planning, assembly line, blending, purchasing and inventory control.

Employment, training, layoffs and quality control

Allocating R&D budgets most effectively

7. Maintenance and Project Scheduling:

Maintenance policies and preventive maintenance Maintenance crew size and scheduling Project scheduling and allocation of resources.

8. Personnel Management:
Manpower planning, wage/salary administration. Negotiation in a bargaining situation.

Designing organization structures more effectively.

Skills and wages balancing. Scheduling of training programmes to maximize skill development and retention.

9. Government:
Economic planning, natural resources, social planning and energy. Urban and housing problems Military, police, pollution, control, etc.,

CLASSIFICATIONS OF PROBLEMS IN OR:

Broadly, speaking in O.R. can be put into the one of the following categories: 1. Allocation Problems

2. Replacement Problems
3. Sequencing Problems

4. Routing Problems
5. Inventory Problems 6. Queuing Problems 7. Competitive Problems 8. Search Problems

Allocation Problems:
Allocation Problems involve the allocation of resources to activities in such a manner that some measure of

effectiveness is optimized.
If the resource is people who can each perform any one of the given jobs in different amount of time and measure of effectiveness is the total time to perform all the jobs when one and only one person allocated to each job then the allocation

problem is known as Assignment problem.

Replacement Problems:
Replacement Problems are concerned with situations that arise when some items (such as Machines, Electric Light

Bulbs, Monitors, CPU, etc.) need replacement because the

same may deteriorate with time or may break due to new developments.

Sequencing Problems:
Sequencing Problems are the problems concerned with replacing items in a certain sequence or order for service

Routing Problems:
Routing Problems are related to finding the optimal route from an origin to a destination when a number of alternative routes

are available.

Inventory Problems:
Inventory Problems are problems with regard to holding or
storing resources. The decisions required generally entail the determination of how much of a resource to acquire or when to acquire it.

Queuing Problems:
Queuing Problems or what are known as waiting-line problems are problems that involving waiting for service

queuing problems encircle us from the time we rise in the

morning we retire at night.

Competitive Problems:
Competitive Problems arise when two or more people are competing for a certain resource which may range from an opponents king in a game of chess to a large share of the market in the business world.

Search Problems:
Search Problems are concerned with searching for information that is required to make a certain decision. The Problem concerning exploring for valuable natural resources like Oil or some other mineral is an example of search problems.

Limitations of O.R: The inherent limitations concerning

mathematical expressions. High costs are involved in the use of OR techniques. O.R. does not take into consideration the in tangible i.e., nonmeasurable human factors. O.R. is only a tool analysis and not the complete decision making process.

PRESENTED BY,

P.MALLIKARJUN
LAQSHYA GROUP OF COLLEGES